News: 2008 1st Quarter

The $26 billion South Carolina Retirement Systems hired Independent Fiduciary Services ("IFS") to evaluate the System’s investment operations and accounting infrastructure. This project will be carried out by the IFS Operational Review practice. IFS was officially engaged on December 19, 2007.

The Board of Trustees of the Sheet Metal Workers Local 292 Pension and Annuity Fund in Troy, MI hired IFS to provide ongoing investment advisory services. Among other things, IFS will advise the Board of Trustees regarding overall asset allocation and investment structure, investment manager selection, performance evaluation and monitoring.

IFS has been selected as the on-going retainer investment consultant on behalf of the USW Retirees of the Dana Corporation Health Care Trust. The Trust is a “stand-alone” retiree medical Voluntary Employee Beneficiary Association (“VEBA”) which is independent of Dana Corporation. IFS will advise the Trust Committee on investment matters related to investment policy development, asset allocation and investment structure, investment manager selection, performance evaluation and monitoring.

IFS recently completed performing an Operational Review for the Arizona State Treasurer’s Office, which included the $2.36 billion Arizona State Endowment Fund’s investment strategy.  The final report was issued in February 2008.

The theme for the IFS 2008 Educational Conference was "Navigating Waves of Change" The event was held Sunday, March 9, 2008, through Tuesday, March 11, 2008, at the Westin Diplomat Resort and Spa located in Hollywood, Florida. This event was the fourth educational conference IFS has designed and presented especially for benefit plan fiduciaries, and was attended by a broad cross-section of IFS' clients.

The formal first day of the event began with a welcome by Francis X. ("Frank") Lilly, CEO and Chairman of the Board of IFS. Mr. Lilly welcomed the conference attendees, program participants, and IFS staff to the conference and outlined the agenda for the upcoming days' events. United States Congressman Rob Andrews (D-NJ), Chairman of the House Subcommittee on Health, Employment, Labor and Pensions, then provided attendees with insightful views of factors affecting pension, health and welfare and larger national political and budgetary issues on Capitol Hill.

Congressman Andrews was followed by Greg Valliere, Chief Strategist at the Stanford Washington Research Group who provided his unique perspectives concerning recent events in Washington as well as a non-partisan view of the 2008 U.S. presidential election race. Doug Poutasse, Executive Director of the National Council of Real Estate Fiduciaries then provided an in-depth view of the correction in the residential housing market and strategies for long-term institutional real estate investors to keep in mind in volatile times.

The afternoon panels of experts included a discussion of current ERISA topics with Samuel W. ("Skip") Halpern, IFS President, and David Blitzstein, Special Assistant for Multiemployer Funds, Collective Bargaining Unit of the United Food and Commercial Workers International Union. The two panelists discussed the risks of funding pension and health liabilities for ERISA plans, including specifically, what those risks are, who ultimately bears them, and how those risks are sometimes transferred. Mr. Halpern and Mr. Blitzstein also outlined ways plan fiduciaries ways can constructively deal with the stresses that often placed on their plans.

The day ended with a presentation by Mr. Lilly and Mr. Edward Patchett, CFA, Senior Vice President and Managing Director of IFS, describing the 2008 IFS Asset Allocation Model. A look into the 2008 IFS Asset Allocation Model revealed expert guidance to plan fiduciaries concerning how a well-diversified portfolio of assets might be positioned, in light of the market volatility and outlook that was described earlier in the morning.

The second day of the conference allowed conference attendees to choose one of two break-out sessions on a wide variety of investment topics. Each session was designed to provide greater detail into areas highlighted by the IFS Asset Allocation Model, including:

¨ The Basics of Investing in Public Markets

¨ Considerations for Investing in Private Markets

¨ Non-Traditional Investment Tools

¨ Overview of the Mortgage-backed Securities Market

¨ Portable Alpha Investing

¨ Considerations for Investing in Non-U.S. Markets

¨ Relaxing Investment Manager Guidelines - Is More Discretion Better?

¨ Hedge Fund Trade Examples

Following the second day's breakout sessions, the conference was closed by Mr. Lilly and Mr. Halpern, who individually thanked the program participants and conference attendees for a creating a unique and successful educational conference event.

The 2008 IFS Educational Conference evaluation forms indicated that that the conference was highly valued by attendees. If you would like a copy of the conference presentations or wish to be placed on the mailing list for the next IFS Educational Conference, please contact us now.

Steven Harding, Managing Director for the IFS Operational Review Practice, had an opportunity to speak at two recent conferences: Ohio FORUM and New York PERS. At the Ohio FORUM conference, Mr. Harding spoke on the topic of "Developing and Maintaining a ‘Best Practice’ Internal Auditing Function", which included the operational risks of money managers, sections of the IIA Research Foundation Common Body of Knowledge, and a top 10 list of "best practices". At the New York PERS conference, Mr. Harding was one of two panelists who spoke on the topic of "Understanding the RFP Process". This topic addressed areas such as what are the key questions you should be asking in the RFP, what criteria should be considered during the selection process, and how to effectively evaluate submitted proposals.

Edward Patchett, CFA – Senior VP and Managing Director presented at the International Foundation of Employee Plans’ Investment Institute held in San Francisco, CA, April 14-15, 2008. Mr. Patchett presented session was entitled, “Current Issues Touching Investments.” Mr. Patchett’s presentation addressed three topics (1) fee transparency, (2) qualified default investment options (QDIAs) for defined contribution plans and (3) the nature and structure of Voluntary Employee Beneficiary Associations (“VEBAs”).

Jeffrey Covell, CFA, re-joined IFS in March 2008. Mr. Covell is primarily responsible for working with the firm’s retainer investment consulting clients. Prior to re-joining as an Assistant Vice President, Mr. Covell worked as an Investment Analyst for a public pension fund.